Brookfield Renewable Power sells C$450 million notes; Canada bonds weaken on long end

By Cristal Cody

Prospect News, Oct. 7 - In the Canadian corporate bond market, Brookfield Renewable Power Inc. sold C$450 million of 5.14% series 7 medium-term notes due 2020 on Thursday, said Brookfield Renewable Power spokesman Zev Korman.

The notes (/BBB/BBB) priced at 99.961 to yield 5.145%, or a spread of 235 basis points over the Canadian benchmark bond.

"The response to the offering was quite strong," Korman said.

The securities were not offered in the United States.

CIBC World Markets Inc. and Scotia Capital Inc. were the lead bookrunners.

Proceeds will be used to redeem the 8.75% series 5 medium-term notes due Feb. 3, 2012 and for general corporate purposes.

Toronto-based Brookfield Renewable Power, wholly owned by Brookfield Asset Management Inc., owns, operates and develops hydroelectric power facilities in Canada, the United States and Brazil.

Brookfield Asset Management, focused on property, power and infrastructure assets, has more than $100 billion of assets under management.

Sell-off in long-term bonds

Long-term Canadian bonds were weaker as investors held off for jobs data scheduled for release on Friday.

"It was generally a mixed day in the Canadian market," said Douglas Porter, BMO Capital Markets Corp.'s deputy chief economist.

"We saw some pronounced weakness at the long end of the market as we did in the U.S. as well, but some strength at the short end," he said. "The short end is basically staying close to home until we see tomorrow's payroll reports in Canada and the U.S."

The two-year bond yield fell to 1.338% from 1.35%. Canada's 10-year bond yield rose to 2.75% from 2.74%.

"In Canada, long-term yields in recent weeks had gotten to their lowest level in decades," Porter said. "We're seeing a little bit of correction. Today's moves could be washed away quite easily by tomorrow's slate of economic data. Tomorrow will be a real test of the market to see if this is near the end of the rally."

Short-term U.S. Treasuries rose, sending yields down to new lows, after the Labor Department said in a report that the weekly unemployment claims fell 11,000 to 445,000 in the previous week.

The yield on the 10-year Treasury note fell 1 bp to 2.37%. The yield on the two-year Treasury note dropped to 0.27% from 0.30%.

In addition to private-sector job reports due out on Friday, Canadian housing starts and Bank of Canada surveys are scheduled for release.

"Hearing if it's a negative print, the Fed will be in before the Nov. 3 meeting for QE2," a trader said.

Market investors expect the weaker data to convince the Federal Reserve to start a new round of bond purchases, also known as quantitative easing, to stimulate economic growth.

Bond markets will be closed Monday.

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